March 29, 2013

In a bid for more information about how consultants landed lucrative contracts to review bank foreclosures, Williams & Connolly filed a Freedom of Information Act suit against the Office of the Comptroller of the Currency on behalf of an unnamed client.

The suit, brought by partner David Aufhauser in U.S. District Court for the District of Columbia, seeks documents that detail the OCC’s criteria for hiring "independent" consultants to review bank foreclosures.

The OCC and the Federal Reserve in 2011 directed mortgage servicers including Bank of America, Citibank, Wells Fargo and Goldman Sachs to hire independent consultants to embark on a case-by-case review of hundreds of thousands of foreclosures. The goal: to determine whether borrowers were afforded all of the protections they were entitled to under the law and to provide compensation to homeowners harmed by bank errors.

But the process seemed mainly to benefit the consultants, who raked in nearly $2 billion through November 2012 without a single borrower receiving compensation. As OCC head Thomas Curry put it in a February speech, the independent foreclosure review “proved to be much more complicated than anyone anticipated.”

In January, banking regulators pulled the plug on the program, striking deals with 13 servicers to pay more than $9.3 billion in cash payments and other assistance to help borrowers.

In its FOIA suit, filed on March 27, Williams & Connolly wants to know exactly what guidance OCC provided to mortgage services for hiring the independent consultants. The suit seeks “All documents and/or records relating to the OCC’s definition of independence,” including “Any documents and/or records relating to determining whether any particular independent consultant…was or was not independent.”

Companies including Promontory Financial Group, PricewaterhouseCoopers, Ernst & Young and Deloitte & Touche were hired by mortgage servicers to conduct the reviews.

The OCC initially refused Williams & Connolly’s request in full, citing FOIA subsection (b)(8), which exempts information “contained in or related to examination, operating, or condition reports prepared by… an agency responsible for the regulation or supervision of financial institutions.”

Williams & Connolly appealed the request to the OCC in September, and “specifically noted that the OCC could not withhold the documents under the stated exemption,” according to the complaint.

The OCC in December released five pages of partially redacted documents related to its definition of independence and provided documents that were publically available on its website. Also, the agency offered new grounds for withholding information, citing subsection (b)(5) which exempts “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.”

Aufhauser argued in the complaint that Williams & Connolly has a “right of access to the documents requested, and Defendant has no legal basis for its actions in withholding the right of access to such documents.” The suit also seeks attorneys’ fees.

Aufhauser, who did not respond to a request for comment, previously served as general counsel of the Treasury Department.

Comments

I agree with you Barbara! We lost our home to GMAC, After NEVER paying a late payment I contacted them to consult and advise our financial status has changed, we will need assitance soon, I'm using the m oney in my savings account to keep up the monthly payments but in 4 months our savings will be depleted, My Dad just died, and My Husbands hours at work just got reduced, we are struggling to make the house note, can we talk about a loan modification? They told us, NO, our payments have not fallen behind therfore we do not qualify to apply. Although I can prove our financial status and show a decrease in income and all our financial obligations, they would not consider a loan mod in advance because were not late, yet. When the 4th month came and I could not make the installment, I called them and they said, you need to be 3 months behind to qualify and apply. Now tell me! what kind of garbage is that? Once I applied, they returned the application to me twice, said i missed a document or did not check a box, or fax us a form, but never giving me the fax number! All the while time is ticking and the collection process has started. No one ever picked up the phone to call me, and no one ever called me back! I have a phone log that I made dozens of phone attempts, if I reached someone they were never the right person to talk to, If I left voice mail they never called me back. I even offered to make partial payments but no replies. IT WAS AN ABSOLUTE TRAGITY, but they were quick to send those collection notices, I have a shoe box full of those, an eviction notice went up on the door, and I realized I had no recourse. A realtor friend suggested we attempt a shortsale to retain whatever credit worthiness we could, its amazing how the conversation of shortsale was quickly negotiated between the realtor and the mortgage company. My Father built that house, it was my family's inheritance, but now we are renting somewhere else and a strange family lives in our home. I feel so wronged and violated , and they just don't care ! We are back on our financial feet, but do not have the funds to buy another home. If they were really sorry, they should give me a loan so I could buy another home, not a couple hundred dollars and feel justified. It's Criminal !

I AGREE! After 2 years of trying to pick myself and my family up after losing the place my children, STILL! call HOME in MN. I have yet to find an attorney who TRUELY believes a wrong has been done, or has the GUTS to fight! NOT an attorney trying to GET RICH off of our desperation for justice. An injustice which started from the mortgage broker, inflating the appraisal, finding the initial lender,then selling the mortgage, sooner than the ink can dry! to CERTAIN BANKS, waiting in the wings for these mortgages to be handed off to them, under a false name, waiting for the inevitable forclosure. THEN when financial trouble occurs, the "SERVICING COMPANY" who makes money from our late fees, tells us, "You are not eligable for a remodification until you are at least 3 months deliquent on your mortgage. AND
now that we can't afford homeowners insurance, they provide homeowners insurance for us. WITH THIER OWN NAMED INSURANCE COMPANY, Charging us DOUBLE the standard insurance premiums. OH! and adding an "INFLATION RIDER" AFTER the Sheriff's sale was completed. Does the PLEDGE OF ALLEGANCE still say "AND JUSTIVE FOR ALL?" OK...then SOMEBODY, PLEASE...PROVE IT!